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National standards would lift trust in ag brand claims: Keogh

Beef Central, March 4, 2019

Australian agriculture should consider developing national information standards to ensure consumer trust of brand claims, ACCC Deputy Chair Mick Keogh told the International Farm Management Association Congress in Tasmania today.

ACCC deputy chair Mick Keogh.

Australian farmers have been increasingly targeting premium markets in recent decades, with most of the growth in the total value of Australian agricultural output coming from an increase in the average value of products, rather than an increase in the volume of output.

However, critical to continuing success in targeting higher value premium markets is the level of trust consumers have in the information they are provided with about the products they are contemplating purchasing.

Mr Keogh said there is a need for all involved in the sector to ponder whether current systems are robust enough to sustain the integrity of existing brand claims.

It was important for the agriculture sector to ensure there are robust checks and balances in place so that consumers are getting the premium products they are paying for.

“The integrity of premium claims needs careful consideration to ensure consumers retain their trust in premium products,” Mr Keogh said.

Mr Keogh suggested national information standards, similar to the one used for free range eggs, which outline minimum requirements when making certain premium claims could be beneficial to the industry.

“Many of the product characteristics consumers are prepared to pay premium prices for are not able to be determined just by looking at the product. For example, an organic lamb cutlet usually looks the same as a conventional lamb cutlet. Wool from unmulesed sheep looks the same as wool from mulesed sheep,” Mr Keogh said.

“There is some merit in the agriculture sector considering national information standards, as a model that could be more widely adopted in order to better protect the credibility of industry-agreed standards in domestic markets, and at the same time avoid consumer confusion and maintain consumer trust.”

Mr Keogh also explored the change that has occurred in agricultural supply chains in order to enable processors and retailers to better meet specific consumers’ requirements in the premium goods market.

“Processors and retailers are increasingly dealing directly with farmers to ensure consistent supply of higher value products, and bypassing the more traditional agricultural markets,” Mr Keogh said.

“While many farmers are benefitting from these direct dealings, price transparency is decreasing and pricing complexity is increasing. This is because processors and retailers are using more and more complex pricing systems that target very specific product qualities and characteristics.”

“This means farmers cannot easily compare offers from different processors, and are therefore in a weakened bargaining position in their price negotiations,” Mr Keogh said.

Mr Keogh said the ACCC would continue to collaborate with industry, government and consumers to get the policy settings right in response to the emerging challenges in the agriculture sector.

A copy of Mr Keogh’s full speech is available at: The future of global agriculture.

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Comments

  1. Paul Franks, March 5, 2019

    In the real world I am yet to see any “integrity” system that is not able to be easily worked around. It is simply because it is near impossible to have survelliance on properties to the extent that everything can be guaranteed to be as it should.

    We rely on trust, as we have no way of knowing other then an honesty system, if say an organic producer slyly puts some ivermectin on some breeding cows during a drought to combat parasites. Or a certified grass fed producer accidentally puts out some liquid supplement with monensin then decides to ignore it.

    I think we are lucky that Australian producers have proven most of them will do the right thing regardless of what integrity system they are using, essentially rendering such schemes as pointless money wasting exercises.

  2. Ian McKenzie, March 4, 2019

    It would be common sense that direct dealings would better reflect the producers Income as both sides of the production chain become partners in the Marketing process.In most cases their are daily up to date markers and price transparency to allow farmers to make viable decisions.
    It is drawing a long bow to say price transparency is decreasing because of better overall pricing systems that are becoming more complex.
    I hope that Mick and the ACCC do not add another layer of bureaucratic procedures that add to confusion.

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